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Uncertainty sees agriculture confidence at 2016 low

The Agbiz/IDC agribusiness confidence index declined, to its weakest level since 2016, to 48 in the third quarter.

An index tracking confidence in South Africa’s agriculture industry declined to the lowest in more than two years as the ruling party presses ahead with plans to change the constitution to make it easier to expropriate land without compensation.

The Agbiz/IDC agribusiness confidence index declined to 48 in the third quarter, the Agricultural Business Chamber said in an emailed statement Monday. That’s the weakest since 2016, when the nation was in the grips of a drought that ensued after the lowest annual rainfall in at least a century. A reading below the neutral 50 mark means industry participants, who were surveyed in August, are downbeat about conditions.

Perceptions of capital-investment confidence fell to the lowest point since the fourth quarter of 2017, when the ruling African National Congress adopted the policy that could enable land expropriation without pay.

The move to amend the constitution has added to wider emerging-market jitters in knocking South African assets. Critics of the plan and investors say the move could lead to an erosion of property rights. The ANC says more needs to be done to correct racially skewed land-ownership patterns dating back to colonial and apartheid rule. While there’s widespread consensus that land reform needs to be accelerated, views on how it should be done are widely divergent.

Policy uncertainty

Output by the agricultural industry contracted 29% in the second quarter — a major contributor to the country falling into its first recession since 2009.

“The root of pessimism” is lingering policy uncertainty and weak economic growth, said Wandile Sihlobo, the head of agribusiness research at the chamber. “The lack of clarity regarding the land-reform policy proposal, particularly expropriation without compensation, remains a key risk that could potentially undermine investment and long-run growth prospects in the sector. Nonetheless, we have not seen evidence pointing to disinvestment yet.”

The index reflects the perceptions of at least 25 agribusiness decision makers on aspects including turnover, employment and export volumes.

© 2018 Bloomberg L.P
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Why spend invest millions into a farm, work long hours under extreme weather conditions if government seems confused?

Where is the assurance and support from government for the farming industry?

Did agriculture not “rescue” GDP and inflation in the last two years?

Exactly! Compare with solidarity with farmers, demonstrated by smart leaders of prospering economies.

I see you guys don’t understand what this is all about. Its just too sad.

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